We've been operating a branch in Houston, TX for the past couple of years. In our recent FDIC exam, the examiner recommended that we provide support to more non-profit organizations in Houston, as we had provided only a scant amount through our bank's Foundation. Our reason for justifying only a small amount of support in that assessment area is because our assets at that branch are small $68Mln est. Howeverm they did not see it that way so they recommended that we increase our amount support in that area. To that end, I was trying to find out does anyone know of any non profit organizations in Houston where I may have the branch manager to partner with or serve on an advisory committtee or perhaps even hold a board member position in order improve our CRA rating in Houston and we receive CRA credit? Any assistance or guidance would be greatly appreciated.

I would thank him for the suggestion and move on. I would not spend a whole lot of time on it. Depending on your overall asset size and your overall assessment areas, unless you are totally deficient in other areas, this will not impact your overall CRA rating. If something presents itself, fine - but don't beat yourself over the head to come up with something to satisfy the whims on one field examiner. If it is not in the ROE, which I can't imagine that it would be, don't let it take up much time besides reminding the branch manager to keep their eyes open.

Thank you so much. I've had these discussions quite often with my boss as to whether or not we are over-reaching in this regard. We hear from so many non-profit organizations constantly soliciting us because they are aware of our bank's Foundation and the grants that we provide for CRA related services. While I am aware of our institution's role to reach the underserved in LMI areas of the community and have no problems providing funding for the majority of these non-profit organizations, I feel that management has caved in to the fear and pressure of the advocacy groups e.g., Greenlining Institute, CRC, etc. They are afraid that if we expand, open additional branches, or acquire other banks,as we have in the past 2 years that these groups will come in and wreak havoc, which has already occurred with one of our competitors. Our Foundation has depleted its funds for 2007 and no matter how much I 've explained this to some of these non-profit groups, they still insist on us providing a small donation for their gala dinners after I've already informed that there is no money available. They act as though they are entitled to be funded on an annual basis for their programs and it is becoming an annoyance to me.

"a small donation for their gala dinners after I've already informed that there is no money available"

I would not be doing much of that at all. I would save my money for opportunities that really count. IMHO - giving them money just because they are non-profit and just because they ask for money - is not a good strategy. With limited resources you want to fund activities (and I ain't talking about a dinner where a bunch of people sit around and pat each other on the back)that have the biggest impacts within your assessment area. That may mean finding one project rather than giving a small amount of money to dozen groups.

ComplianceKing,

You might want to setup a system where the group will need to apply for the grants your foundation gives out. This will serve two purposes. One it will help you get all the documentation you need to satisfy the examiners, and two it will weed out all the organizations that want a quick donation. The ones that will do the work to apply for a grant, will really want the grant and are probably the groups you want to partner with

Bubs63,

We have an application process whereby the non-profit groups may send in their applications as our Foundation board meets each quarter to determine the amount of grant support that they will provide to each non-profit group. There is a vetting process involved and the board approves and/or denies the number of non-profit organizations that is submitted to them. In spite of this, I still have branch managers of the bank who are involved with non-profit organizations who submit requests for grants and at times I feel pressured to give in because they will go directly to the one of the Foundation board memebers, which is going over my head. The Foundation was intended to provide outreach and assistance to help the non-profit groups in our assessment areas, but I just don't see this happening. I've only been in this CRA function for 1 year, as I was asked to help out the department, because the individual who headed it up moved out of state. My area of expertise is lending compliance, but now I've taken on a two-headed monster that seems to be spinning out of control.

I Feel your pain. You may want at your next Foundation meeting remind the members what the role of the foundation is and the impact to the CRA program for the bank. You should also remind the foundation members and bank staff, what the process is for getting a donation. Some maybe new and do not understand the process. You also might want to discuss the definition of CRA Qualified donations. Good luck

Sorry I am getting into this late but if you are still looking for community development nonprofits in Houston I would start with the CDC Association of Greater Houston. Houston is only one of two cities in the country to have its own association of CDCs, as far as I know. Current membership numbers near 100 organizations, all involved in some form of community development.

It gets worse. Have you ever heard of having to provide grant support for a non profit organization because they have $100,000 deposited at your bank? I've been getting requests from our branch manager in Boston to provide grant support to a certain non-profit group that shall remain nameless, because they have a relationship with the bank. This is unfair to those organizations that have already been promised grant assistance. The whole process sounds purely political and it incenses me.

Regards,

this situation was be self-dealing at our bank and would result in disciplinary action; the invitations that go out from our Foundation never consider business considerations

That may be true for the foundation but I know when I am presenting a request for funding from an NP org one of the questions I am asked is if they have a banking relationship with us. Our officers still look at the business relationship aspect to who we give to. That is not to say we don't give to those that don't have a relationship with us but larger donations come with relationships.

I am glad that you share my sentiments. The whole thing does not make sense. This is not the way a foundation that provide CRA grants to non-profit groups should be handled. I can understand the non-profit group has a banking relationship with us, but to ask us for $20,000 grant to support their cause I find far over-reaching. If nothing else this should be considered an ethical issue.

Regards,

it absolutely is; it is one thing if it is business money and hits the retail or lending side of the bank's budget; but once the money is donated to the Foundation there should never be any comingling of support for the community and business consderations of the bank - it is an ethical issue

I am so glad that you brought up the word "ETHICAL" , because I can't overstress that this is indeed an ethical issue. I've told branch managers that I am involved with a non-profit organization out side of my job that assists at-risk youth with literacy issues. However, at not one time have I ever asked our Foundation to provide grant funds to my organization, whether or not my organization have a business account with the bank, which it does not. Frankly, I would not entertain such a thought, because the Foundation exists to help non-profit groups that are in our assessment area. Business consideration are the 2 operative words, because the managers are afraid that the by not providing a grant from the Foundation to assist the non-profit organization in its cause, that they will withdraw their huge deposits they have on hand with our bank. Let's face it. I know that branch managers particularly those in VP, Officer level positions benefit from the number of business accounts that are opened whether they're for-profit businesses or non-profit organizations. If not, please correct me if I am wrong.

Regards,

KC,

I understand what you're saying when the question is comes up as to whether the NP org. has a banking relationship with the institution. Our grant application does not specifically ask whether the NP organization has a banking relationship. However, it does asks whether any of our bank's officers hold any board position e.g. advisory , Pres. VP, Sec. or Treasurer etc. at the organization in question. If this is the case, then it is okay, because an FDIC examiner informed us during a recent audit, that if any of our bank employees or officers serve on the board of any NP organization or participate on an advisory panel, then it would qualify our institution for CRA credit provided they produce support documentation evidencing such. So I have no problem supporting any NP orgs. in this capacity. The problem is when we have none of our bank officers (particularly branch managers) serving on the boards or committees of those non-profit orgs. but they still insist on helping a NP org. because the NP org. have their business account (savings, checking, CD, TDC acct.) with our bank. I just find it strange.

Regards,